All Forum Posts by: Matthew Herrington

It is not necessarily easy but it is not impossible to do on your own excepting the old adage about fools for clients. First you must consider: What are you attempting to achieve with the LLC? Anonymity and reduced liability are the usual aims of an LLC arrangement. Liability can also be reduced with an umbrella insurance policy. An LLC is usually formed for each property otherwise a legal action against one could ensnare the other. Each LLC will result in a tax return which means your accountant will charge accordingly. Just make sure your LLC arrangement is addressing a specific business purpose and you have assessed the risk and cost associated with each.

Get some quotes on the work you anticipate doing. What is the net present value of your future cash flow vs that $950K offer. Is the offer subject to inspection? Put some numbers to your madness! Have you set aside money for capital expenditures (cap ex)? A refi could take care of those projects and still keep that cash flowing. You are not crazy for thinking about selling, you are crazy for not having your walk away price already fixed in your mind. All real estate is for sale at the right price. What is your "right price"? Do the math!

There are others, but Frank Gallinelli's book 'What Every Real Estate Investor Needs to Know About Cash Flow... And 36 Other Key Financial Measures' is a good start to figuring out why you should or shouldn't hold that property for that offer.

Hi Duane! I replied to a later post and came across this one as well. @Steve Zappalla hits the right notes here. You are looking for "Legal 2 family by CO". You can also check this status by looking at the tax bill for the Long Island property. It should show the code under "Property Type". Here the NYS Residential property codes:

200 – Residential

Code Description Notes

210 One family year-round residence.             A one family dwelling constructed for year-round occupancy (adequate insulation, heating, etc.)*

 *Note: If not constructed for year-round occupancy, see code 260.

215 One family year-round residence with accessory apartment.        A one family, year round residence with a secondary self contained dwelling unit. Accessory apartments are usually contained within or added to the principle residence and are often occupied by immediate family members.

220 Two family year-round residence.             A two family dwelling constructed for year-round occupancy.

230 Three family year-round residence.          A three family dwelling constructed for year-round occupancy.

240 Rural residence with acreage.      A year-round residence with 10 or more acres of land; it may have up to three year-round dwelling units.

241 Primary residential, also used in agricultural production

242 Recreational use

250 Estate.   A residential property of not less than 5 acres with a luxurious residence and auxiliary buildings.

260 Seasonal residences.       Dwelling units generally used for seasonal occupancy; not constructed for year-round occupancy (inadequate insulation, heating, etc.). If the value of the land and timber exceeds the value of the seasonal dwelling, the property should be listed as forest land (see category 900).*

*Note: If constructed for year-round occupancy, see code 210.

270 Mobile home.     A portable structure built on a chassis and used as a permanent dwelling unit.

271 Multiple mobile homes. More than one mobile home on one parcel of land; not a commercial enterprise.

280 Residential Multi-Purpose/Multi-Structure

281 Multiple residences.        More than one residential dwelling on one parcel of land. May be a mixture of codes 210's, 220's, and 230's, or all one type.

283 Residence with incidental commercial use.            A residence which has been partially converted or adapted for commercial use (e.g. residence with small office in basement). Primary use is residential.

Hi Duane, I would do some serious due diligence to confirm the zoning and status of this property. You'll want to see the tax bill and the CO for starters. LI Town Zoning Boards are not huge fans of non-conforming properties in single family neighborhoods. An accessory apartment is a permit term, not a zoning term. Towns often issue permits for accessory or family use that terminate upon change of ownership and are not transferable. Accessory apartments are notoriously added without permits or CO's. If you plan on using the 203K and occupy the house as your primary residence that is a great solution but expect extra scrutiny because of FHA requirements and involvement. LOL I have had some experience in front of the LI Zoning Boards and some of the Building Depts. @William Sing has the right idea about checking into the listing status. I always like to check the MLS to see what the story is.

Hi Jada, Whatever loan program is asking for those fees upfront is in no way a conforming mortgage and I urge you to find a licensed reputable residential loan Originator first and try to qualify that way. If you can't qualify then ask for other options through the licensed lender. They often have reputable financing companies who specialize in non-qualifying loans. It's tough to tell from the numbers you shared if your current landlord is offering a fair deal for your market. A retaining wall does sound like a big expense but if multiple inspectors, engineers or contractors have not given estimates for the repair you may not have the correct details to make an appropriate counter-offer. In the same lane as @Chris Martin: If this property is your primary residence it may qualify for an FHA 203k loan which would allow you to incorporate the repairs into your new mortgage. There are options for you to weigh and if you bring a well prepared purchase plan to your landlord you might suddenly become his best option for the sale of the property. Feel free to message me and we can try to find someone in your area who can help. Keep working at it and you will find a way!

@Andrew Everett talk to your lender. And then talk to 3 more. You can determine both the total finance rate and the total finance charge for each lending scenario and each lender! These are routine calculations that include closing costs and fees that appear on your loan estimates. These numbers are your cost of capital and when done correctly allow you to directly compare the cost and find the lowest priced lending option. If you determine the finance charge for the new 30 year mortgage you can compare with the remaining charge on the 15 year loan. These will be solid numbers you can apply toward figuring out the most profitable option. But also remember the reason for the negative cash flow lesson: Passive Positive Income is exactly that, your investment will survive without any outside contribution and there is much less risk. The 15 year option is likely be the most profitable in the long run but you run the risk of crashing and burning if you can't make up the negative cash flow at some point in the next 12 years. Good Luck!

@Jada Brown Do you have all your financial statements in order and available for review? Do you have a track record of previous successful projects? How is your recent personal credit history? Are you partnered in an LLC that has an established financial record and good credit history? Even a Hard Money lender is going to want to see who they are dealing with. A wise person once said you eat an elephant one bite at a time. As you probably know, an investment project of any size has many parts and the financing tends to be no different. You might be able to achieve your goal by finding 25/75 or 5/10/85 using several financing sources. Brandon Turner has a famous book that explains why 'no money down' doesn't mean 'no money at all'. That deal definitely doesn't exist because somebody somewhere is paying for it even if it isn't you. Please tell us more about what is going on and there should be some great advice for you here. Don't get frustrated because you will need to be persistent in finding a team of partners and those partners will need to get paid. I agree with @Scott Wolf proceed with caution when anyone asks you for money up front. This is a RED FLAG and upfront fees should only apply to direct tangible services on your behalf such as a credit report, inspection, appraisal, condo letter etc. Good Luck!

https://twitter.com/makematt/status/1413894677049352198?s=21

Check out this Twitter debate…

Check it. Guys look like they are in a lot of trouble. Is there such a thing as too creative?

https://dailyvoice.com/new-york/nassau/news/trio-from-long-island-queens-nabbed-for-alleged-mortgage-fraud-scheme-feds-say/800832/

And more:

https://www.justice.gov/usao-edny/pr/united-states-files-civil-fraud-suit-against-three-individuals-and-multiple-real-estate

@Thomas Tarry (as you are a Licensed Broker I offer many apologies if I am preaching to the choir of things you are already well aware) you are most definitely entitled to file an ethics complaint in NY. You have to decide what you want to get out of further engagement on this original offer. In New York you are also entitled to documentation that your second all- cash offer was presented to the seller because the listing is still active on the MLS. The attorney is not the Seller and documenting the 2nd offer presentation is owed if you ask for it (watch the seller's attorney scramble on that). The MLS in and of itself is a contract of cooperative agreement between member Agents and its status should be taken very seriously by all participants. This is often neglected or taken for granted by Salespeople, Administrators and Brokers who move at the "speed of business". You have a very good chance of catching this Agent and his broker out on a number of ethical and procedural issues without knowing further details. If you want to modify this Agent's behavior and spare others the maltreatment you were subjected to, requesting the proof of presented offer docs and filing an ethics complaint with the local Board of Realtors Grievance Committee is a good way to send a message by elevating the situation to both Principle Brokers and involving the Board. It seems you have moved on to another interested client and the original investor clients don't seem too damaged by incident. In the end you have to decide along with your Principle Broker and client the value of pursuing an official complaint and the additional burden it places on you. This includes the situation on the ground in a low inventory market where a lack of deals to be had makes time spent on this worth getting the Agent, attorney, and Seller to the table to account for this. On the other hand we are all in business and perhaps pursuing a polite and persistent request for the Agent to grab coffee when they are free to explain what's up, what happened and how to help close the new deal might be the more productive route. If he comes to the realization he is in the wrong, you might be on the receiving end of an "I owe you" leading to a better outcome and future business. You may also find it is as bad as it looks and you (and your clients) will know to stay clear of his bad business. All Realtor's roads are skewed toward cooperation and mediation amongst ourselves so be prepared to be steered in that direction by the Board even if you decide to file the complaint. Whatever you choose keep up the good work, fight the good fight, and keep your Client's best interests at heart.

BTW LOL Nice work on finding another Client interested in the same unit. I applaud you keeping your business mindset and not letting the situation get inside your head. I think you are heading in the best direction: Likely finding out the real story and getting paid to do it on a new deal. We should all be learning from you. Let us know how it turns out, as a NY agent I would be interested and I am hoping for your success.